: A new report by Climate Risks Horizon suggests that India could eliminate its dependence on thermal coal imports by 2029 if it increases its renewable energy capacity by 50 gigawatts annually. This ambitious shift would save India approximately USD 66 billion in foreign exchange over the next five years, with potential savings of USD 173 billion by 2034. The report also highlights India’s growing reliance on imported coal, which has been exacerbated by global price volatility and currency fluctuations. Accelerating renewable energy expansion offers a solution to mitigate both financial and physical risks linked to energy imports.
India’s Growing Dependence on Imported Coal
India's electricity sector has long been reliant on thermal coal imports, a trend that has seen a steady rise over the past decade. In the 2023-24 period alone, India imported approximately 206 million tonnes of thermal coal, costing the country USD 21 billion. This marked a significant increase from previous years, as the value of these imports surged by 124% between 2013 and 2023, driven by volatile global prices and a weakening rupee. With the country’s energy needs steadily growing, particularly during summer months due to higher cooling demands, the dependency on thermal coal imports continues to strain both the economy and energy security.
Between 2013 and 2023, India imported a total of 2,128 million tonnes of coal, with thermal coal making up the vast majority. The annual growth rate of coal imports has averaged 3.7%, but the more alarming statistic is the sharp 40% increase in imports since 2013. This dependency on imported coal poses both physical and financial risks—supply disruptions caused by geopolitical tensions or natural disasters can exacerbate the volatility in energy prices, leading to significant consequences for power companies and consumers alike.
Financial and Physical Risks of Coal Imports
The financial implications of relying on imported coal are considerable, especially given the volatility in global energy prices. Disruptions in supply chains or fluctuations in coal prices can have a ripple effect across the energy sector, impacting both the cost of power generation and consumer electricity prices. The financial risk grows as India’s energy demand continues to rise, driven by rapid urbanization, industrial expansion, and increasing use of electric technologies.
Moreover, the ongoing climate crisis is exacerbating the situation, with more frequent heatwaves pushing up electricity consumption and further straining the energy grid. The country’s per capita electricity consumption increased from 957 kilowatt-hours (kWh) in 2013 to 1,331 kWh in 2022, reflecting both economic growth and the mounting demand for power.
The Renewable Energy Solution: A Path Forward
The think tank Climate Risks Horizon emphasizes that India’s energy landscape could shift significantly by prioritizing renewable energy. The government has already updated its renewable energy targets, aiming to achieve 500 gigawatts of non-fossil fuel energy capacity by 2030. This ambitious goal requires adding 50 gigawatts of renewable energy each year, a target that aligns with the government’s ongoing efforts to expand solar, wind, and other renewable sources.
India’s renewable energy sector is already making strides—by the end of 2024, the country had added 24 gigawatts of renewable capacity, the highest amount ever achieved in a single year. As of now, India boasts 151 gigawatts of renewable energy capacity, primarily from solar and wind sources, with a total of approximately 200 gigawatts when hydro, small-hydro, and biogas are included.
Economic and Environmental Benefits of Renewables
If India succeeds in expanding its renewable energy capacity as planned, it could significantly reduce its reliance on thermal coal imports. By 2029, the country could eliminate coal imports altogether, saving an estimated USD 66 billion in foreign exchange between 2025 and 2029. Over the longer term, this transition to renewables could yield even greater savings, with the potential to cut coal import costs by USD 173 billion by 2034.
Beyond the economic savings, the environmental benefits of such a shift would be profound. Reducing thermal coal imports would not only alleviate the financial burden on the economy but also contribute to India’s broader efforts to mitigate climate change and reduce its carbon footprint. The push for renewable energy would help India move toward a more sustainable and resilient energy system, reducing the risks associated with energy imports and climate change.
Challenges and the Road Ahead
While the goals set by the Indian government are ambitious, achieving them will require significant investment in infrastructure, technology, and policy reforms. The country will need to ramp up its efforts in building renewable energy capacity, particularly solar and wind power, to meet the target of 50 gigawatts per year. Additionally, creating an energy grid capable of handling this increased renewable capacity, while ensuring reliability and stability, will be critical.
The shift from fossil fuels to renewables also necessitates the development of storage solutions to address the intermittent nature of renewable energy. The expansion of grid infrastructure, coupled with advancements in energy storage technologies, will be key to ensuring that renewable energy can reliably meet the country’s growing power demands.
Conclusion: A Cleaner, More Resilient Future
India stands at a pivotal moment in its energy transition. By accelerating its renewable energy push, the country not only has the opportunity to reduce its reliance on imported thermal coal but also to position itself as a global leader in clean energy. The potential financial savings are immense, and the environmental impact would be equally significant. However, realizing this vision will require sustained commitment from both the public and private sectors, along with a comprehensive strategy to address the infrastructure and technological challenges that lie ahead.
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